Beyond the Numbers: Understanding Earnings Management and Its Ethical Landscape (Text Based Course)

This course provides an overview of earnings management techniques and their ethical implications. This course covers basics like revenue recognition timing, expense manipulation, provision adjustments, income smoothing, and cost-cutting. This course also addresses more advanced methods such as financial engineering, tax planning, big bath accounting, accounting policy changes, and round-trip transactions. Throughout this course, the ethical considerations inherent in these techniques are addressed through a series of example situations.

Chapter 1 covers key earnings management method such as revenue recognition timing, expense manipulation, provision and reserve manipulation (e.g., cookie jar reserves), asset valuation adjustments, income smoothing, and cost-cutting timing. It provides a foundation for identifying basic earnings management practices and their impact on financial statements.

Chapter 2 covers advanced earnings management strategies such as financial engineering, tax planning, big bath accounting, changes in accounting policies, and round-trip transactions. Each of these methods are discussed, along with hypothetical examples illustrating their application.